Life Sciences and Healthcare: countering bribery and corruption

Written on 2 Feb 2015

Welcome to the second of our updates on countering bribery and corruption in the Life Sciences and Healthcare sector, examining the regulatory regimes from across Europe.

UK prosecutions highlight hazards for mid-sized companies doing business in emerging markets

December 2014 was a busy month for the Serious Fraud Office (SFO). On 5 December 2014 it obtained convictions against two company directors for offences under the Bribery Act 2010 (and other acts) following an investigation into the Sustainable Growth Group’s promotion and sale of investment products based on “green biofuel” plantations in Cambodia. On 22 December it obtained convictions against the former chairman and sales director of security printing company Smith and Ouzman Limited, as well as against the company itself, following an SFO investigation into corrupt payments made for the award of business contracts to the company.

The 5 December 2014 charges and convictions under the Bribery Act 2010 are the first to be secured by the SFO since the act came into law in July 2011.

The SFO described the Smith and Ouzman prosecution (in which the offences took place prior to the Bribery Act 2010 coming into force and so were convictions under the old anti-corruption legislation) as it “first conviction, after trial, of a corporate for offences involving bribery of foreign public officials”.

Why is this important?

Whilst these convictions did not involve the life sciences sector, they emphasise the SFO’s commitment to prosecuting both companies and their senior officers, the international reach of the UK legislation and the risks associated with doing business in emerging markets.

The Smith and Ouzman convictions related to corrupt payments made to public officials for business contracts in Kenya and Mauritania. That prosecution also shows that the SFO will not only target the largest high profile companies – it will also focus on smaller enterprises where anti-bribery procedures and practices may not be as sophisticated. In the Sustainable Growth Group case the directors were given lengthy custodial sentences of 4 and 6 years for the Bribery Act offences.

The convictions came alongside the UK Government’s publication on 18 December 2014 of the UK Anti-Corruption Plan, a 60 page document setting out the Government’s plan for a greater coherence to the efforts in tackling corruption.

The plan sets out its aims as three fold:

  1. To demonstrate the breadth of the UK’s anti-corruption activities,
  2. To set out clearly the Government’s actions to tackle corruption, and
  3. To set the UK’s priorities for raising international standards and leading the global fight against corruption in all its forms.

Within the Plan the Government has stated that the Ministry of Justice will examine, by June 2015, the case for a new offence of corporate failure to prevent economic crime – which we reported on in our last update. The Plan also outlines the new central register of UK beneficial ownership which will require UK companies to obtain and hold information on their beneficial owners and provide this to Companies House.

An Osborne Clarke article dedicated to this development, which is aimed at greater transparency, is available here.

Doing business internationally gives rise to a broad range of risks relating to bribery and corruption, political risk, sanctions, dispute resolution and international enforcement.  Click here for more information about managing these risks in the life science and health care sector.